Which Way for Intel?

Last week's prime mover, spearheading a nice week in which the Dow Jones industrial average was up more than 7 percent, was the computer chip maker Intel. Intel posted surprisingly good second-quarter earnings and a third-quarter forecast that was also better than expected. The company's stock gained 7 percent in one day, and pulled up the whole chip sector long with it.

Many observers credited the positive move to a recovery from last winter's "inventory correction." The idea is that computer makers, faced with a downturn in the economy, decided to stop buying new chips until they had cleared out some of their old inventory. When those inventories started running low, chipmakers suddenly had markets for their products again.

What does this mean for the future of the industry? It depends on whom you ask. An analyst from JP Morgan told CNN: "Although the Intel quarter was clearly spectacular on all fronts, we continue to believe the upside was driven by inventory replenishment as we have not seen any evidence of increasing PC demand." But the Wall Street Journal saw the "inventory correction" factor as a reason to be bullish, noting that it was "a short-term, one-off deal."

It comes down to which one you think is the anomaly: the inventory correction of last winter, or Intel's recovery from it this spring. Given what happened to Intel - and the rest of the chipmaking sector - last week, it's clear what the investment community's answer is.